Activist shelves call to replace DX board as group mulls merger

THE board of troubled logistics firm DX Group has avoided a City showdown for now after an activist investor called off an emergency meeting aimed at unseating it.

Gatemore Capital Management, which owns 11pc of DX Group’s shares, last month won the right to call an emergency general meeting (EGM) with the aim of replacing chairman Bob Holt and non-executive director Paul Murray with four substitutes.

But this move has now been shelved by the activist, in favour of scrutinising whether a proposed reverse takeover with part of John Menzies, announced last month, is worth pursuing.

“The untimely announcement of discussions between DX and John Menzies has fostered confusion over the purpose of the EGM,” the activist’s managing partner Liad Meidar said.

“Our EGM proposals were brought to address the need for effective leadership and to improve the governance standards of a suboptimal board struc- ture. Our proposals were not designed to act as a referendum on an ill-conceived transaction that has been negotiated from a position of weakness.”

As the proposed deal stands, DX would acquire its larger peer Menzies Distribution for £60m, enabled by the enlarged entity borrowing money, and issue new shares representing 80pc of its share capital. This means DX shareholders would own 20pc of the business, with John Menzies shareholders holding at least 75pc and its pension scheme owning up to 5pc of the shares.

DX shares, which have fallen 93pc since their float in 2014, have been suspended since the proposed Menzies deal was announced on March 31. At the time, Mr Meidar claimed that the board was “looking after themselves” and that the proposed merger was a way to “save face” ahead of the meeting he had called by claiming the proposed deal would solve the company’s problems.

In response, DX chairman Bob Holt said the merger provided a “clear opportunity to deliver significant value”.

Mr Meidar said while he remained opposed to the deal, the merger process could result in new bidders entering the talks or better terms being struck with Menzies.

The planned deal with the John Menzies division came on March 31, the same day it announced a pre-tax loss of £29.3m for the six months to Dec 31 – an improvement on the £87.1m loss in the same period the year before. If the deal goes through, the companies predict cost savings of £8m to £12m a year.

Mr Meidar said such savings had “all too often been elusive in this sector”.

DX yesterday said it would update investors on talks with John Menzies in due course and welcomed Gatemore’s decision on the EGM.